Pachinko may be dying, but Japan’s unique pastime still produces some very healthy numbers. Market leader Maruhan Group booked an estimated US$2.3 billion in gross gaming revenue for its 2017 fiscal year, roughly double that of its nearest rival.

For the uninitiated, pachinko is an electronic gaming challenge that involves using a dial to try to flick metal balls into holes to activate bonus features that yield visual rewards and dole out additional balls. Pachinko parlors today also feature pachislot machines resembling conventional slot machines but have buttons that enable the player to choose when to stop the reel. Winnings can be exchanged for prizes and those prizes, in many cases, can be exchanged for cash at nearby locations, rendering pachinko a form of stealth gambling.

Born in Korea, Han Chang-woo came to Japan at age 16 in 1947 and founded Maruhan a decade later. Over 60 years, the company has assembled businesses including convenience stores, 17 golf courses, a handful of bowling alleys and driving ranges, a bank in Cambodia, plus eight restaurant brands, featuring homegrown concepts and international franchises, often as part of Maruhan entertainment complexes.

But Maruhan’s main focus remains pachinko, expanding to 320 parlors across Japan. Meanwhile, player numbers have declined from 29 million in 1995 to around 10 million today. Betting volume, ¥35 trillion (US$318 billion at current exchange rates) at its 2005 peak, shrank to around ¥22.5 trillion this year. Union Gaming Managing Director in Macau Grant Govertsen estimates pachinko’s gross gaming revenue at 15% of betting volume.

Accompanying pachinko’s decline, there’s uncertainty about the potential impact of casino legalization in Japan. Pachinko relies on convenience, something to do on the way home from work or shopping; some parlors refrigerate your groceries while you play. Integrated resorts are unlikely to compete on those terms.

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